The Cleburne Eagle News (Cleburne, Tex.), Ed. 1 Thursday, July 11, 2013 Page: 4 of 10
This newspaper is part of the collection entitled: Johnson County and Cleburne Area Newspapers and was provided to The Portal to Texas History by the Johnson County Historical Commission.
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By: Joel Victory
By: Wendell Dempsey
FT
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couldn t give a full answer
Purchasing An Annuity
to. He stated that most
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Expanded Protected Resource Amount
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Wendell continued to page 5
109 West Henderson^
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SPOTLIGHT ON
EDUCATION
I was talking to a Cleburne
resident last week and the
conversation drifted over to
Texas school operations and
the way things are done by
many of the districts.
Last week’s Life Care Planning column discussed strategies
to qualify the spouse of a married couple for Medicaid long
term care assistance while the other spouse remains at home
when the couple’s combined assets exceed the allowable
amount. The column discussed specifically three methods:
(1) spending on care; (2) converting countable resources
into non-countable ones and (3) gifting. This column will
discuss two additional methods for married couples.
There is an additional option available for couples when both
spouses’ income levels are low. They can shelter substantial
value in assets by converting these into an income stream
for the stay-at-home spouse. When an incapacitated spouse
enters a long-term care facility, Medicaid allows a spouse
who stays at home to retain a Protected Resource Amount
at the maximum amount of $115,920.00. However, if the
couple’s income produces less than the minimum monthly
needs allowance of $2,898.00 for the stay-at-home spouse,
the Medicaid caseworker may be able to increase the Pro-
tected Resource Amount (PRA) above the $ 115,920.00 PRA
allowed by Medicaid.
Example 1: Howard has Alzheimer’s and needs long-
term care in a facility. His spouse, Peggy retains full ca-
pacity, mentally and physically. Howard and Peggy have
a combined gross monthly income of $1,857.00, which
is $1,041.00 less than the maximum allowed amount of
$2,898.00. We must first give all the income to Peggy, the
stay-at-home spouse. Then we multiply the $1,041.00 per
month by 12 to calculate the amount of unearned income
allowed to Peggy per year. Take this figure of $12,492.00
and divide it by the prevailing rate of interest of a one-year
certificate of deposit (CD). For purposes of this calculation,
we will use 2%. Using that rate, we determine it would take
the sum of $624,000.00 to create that income stream. Peggy
and Howard may be able to shelter that entire amount and
still qualify Howard for Medicaid.
Example 2: Same scenario as Example I, but Howard and
Peggy have $250,000.00 in CDs. Medicaid puts a ceiling on
the Protected Resource Amount allowed to the stay-at-home
spouse. In this case, the PRA can be increased to $250,000
because at 2% interest rate, that amount will produce only
$416.67 per month. If we add that figure to their combined
monthly income of $1,857.00, Peggy is still $624.33 below
the allowable monthly needs amount of $2,898.00. How-
ard can be immediately qualified for Medicaid, all the in-
come will be diverted to Peggy and all the assets will be
preserved.
The current interest rate paid on a one-year CD is closer to
1% than 2%, meaning that couples with low income may
be able to shelter even more assets. This strategy can work
well when couples have accumulated cash assets or appreci-
ated property (which can be sold and converted to cash) but
their current income is low.
Clayton needs skilled care in a nursing home facility. He
and his wife, Iris, own a $250,000.00 home and a 2009 Lex-
us. They have purchased pre-burial policies. None of these
are countable resources. Therefore, they do not disquali-
fy Clayton for Medicaid. However, the couple has saved
$150,000, held in separate bank accounts, $100,000.00 in
Clayton’s name and $50,000.00 in Iris’ name. These bank
accounts are countable resources.
Iris receives a monthly Social Security check in the gross
amount of $850.00. Clayton’s gross monthly retirement in-
come is $2,000.00. What happens when Clayton applies for
Medicaid?
Iris’ and Clayton’s accounts are combined to determine the
resource amount, regardless of which one owns each ac-
count. Therefore, they have $ 150,000.00 in combined count-
able resources. Iris can keep half - $75,000.00. But they
must spend down Clayton’s half to qualify him for Medic-
aid. As previously, discussed, they could do this by spend-
ing the money on Clayton’s care, paying off a mortgage,
credit cards, making improvements to the home, purchasing
a newer car or by gifting and accepting the penalty.
However, Iris and Clayton can purchase an annuity for Iris.
The purchase of a non-revocable annuity will convert the
cash assets into a monthly income payment. If they choose
this route, they should seek professional assistance in doing
so because there are strict regulations and confusing impli-
cations surrounding annuities.
The annuity extend no longer than Iris’ life expectancy ac-
cording to the Social Security tables. If Iris is 85 years old,
her life expectancy is 6.77 years. If she and Clayton pur-
chase a 5 year annuity at $75,000.00, this converts that cash
into a monthly income stream for Iris of $1,250.00 a month
- $75,000.00 + (60) [12 months x5 years] = $1,250.00). Iris’
combined income from Social Security and the annuity will
then be $2,100.00 a month, less than the $2,898.00 allowed
the stay-at-home spouse. That means Iris can keep that por-
tion of Clayton’s income to bring her income to that amount
with the balance paid to the nursing home.
Clayton’s income is divided like this: $2,000.00 - $60.00
(allowance to him) - $798.00 (to Iris to bring her income
level to $2,898.00) = $142.00, the monthly balance of Clay-
ton’s income that must be paid to the care facility.
Second Half
Starts With a
Bang
fCLEBURNE
Sandra W. Reed is an attorney with Katten & Benson, an
Elder Law firm, whose principal office is located in Fort
Worth. She lives and practices in Somervell County. If you
have questions or concerns, please contact her by email at
swreed2@yahoo.com or by phone at 254.797.0211.
" ' 11 is question was one that
, a lot of people would prob-
E ■ "n
LIFE CARE PLANNING
BY SANDRAW. REED
Additional Strategies for Reducing Resources to
Qualify for Medicaid
/
TOMMYEFARAS
Attorney at Law,,.
817-645-6800 501 N. Nolan River Rd, Cleburne 866-810-6800
www.victoryinvestmentstrategies.com
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Some stock investors may have extended their Independence
Day celebrations an extra day last week as the monthly jobs
report released Friday by the Labor Department indicated
195,000 new jobs were created in June, about 30,000 more
than economists had expected, according to CNBC. Other
positive economic data, including strong car sales and a rise
in U.S. manufacturing activity, gave those who are bullish on
the U.S. economy even more reason to rejoice. The S&P 500
finished the week 1.6 percent higher than where it began, while
the NASDAQ added 2.2 percent, according to CNBC.
The Markets
The second quarter offered a level of drama often found in
homes with teenagers.
When investors realized their good friend, quantitative eas-
ing, might have an earlier-than-expected curfew, they threw a
hissy fit that resounded through global markets. The outburst
interrupted the trajectory of Standard & Poor’s 500 Index,
which finished June lower after hitting record highs in May. As
stocks fell, yields on the benchmark 10-year Treasury bond hit
a 22-month high.
Higher treasury yields and a strengthening greenback proved
attractive to investors and capital flowed out of emerging mar-
kets during the quarter. As interest rates moved higher, the cost
of borrowing rose sharply in many emerging countries. That
may impede economic growth, which has slowed already, in
many developing countries. Economies in emerging Asia, Lat-
in America, and Europe grew by about 4 percent on average
year-on-year during the first quarter as compared to 6.4 percent
on average during the past decade.
When compared to growth rates in developed countries, such
as the European Union (EU), that’s still a pretty attractive
growth rate. The EU has suffered seven consecutive quarters
of recession. It’s hard to say the recovery is going well, but
experts are hopeful because the Spanish economy is contract-
ing at a slower rate, Italian business activity isn’t declining as
fast as it once did, the French downturn is moderating, and the
German economic growth is in positive numbers.
It’s a different story in the United States. By the end of second
quarter, economists were predicting 2014 could prove to be
the best year for U.S. economic growth since 2005. The Wall
Street Journal’s monthly survey found that, “Economists... ex-
pect gross domestic product to expand at a 2.3 percent annual
pace this year and 2.8 percent next year. The Federal Reserve
edged up 2014 growth forecasts to between 3 and 3.5 percent,
from a March estimate of 2.9 to 3.4 percent.” Encouraging eco-
nomic signs include:
• Housing market vigor: Experts say housing market strength
will be critical to economic performance in the second half of
the year.
• Employment gains: Unemployment has dropped from dou-
ble-digits to 7.6 percent, although there are still about2.4 mil-
lion fewer jobs than there were before the recession.
• Confident consumers: After years of paring spending and
paying down debt, Americans are feeling optimistic. Consum-
er confidence now stands at a five-year high.
While optimism about the American economy is good news,
it’s important to remember world economies are like members
of a family. What happens to one country or region often has a
significant influence on what happens in the others.
SHE CAN BRING HOME THE BACON AND FRY IT UP
IN A PAN. . . From 1960 through 2011, the percentage of
households with children under the age of 18 and mom as the
primary or sole breadwinner increased from 11 to 40 percent.
According to the Pew Research Center report, ‘Breadwinner
Moms’ fall into two distinct groups: married moms who earn
more than their husbands (37 percent) and single mothers (63
percent). The earnings gap between the two groups tends to be
very large:
“The median total family income of married mothers who earn
more than their husbands was nearly $80,000 in 2011, well
above the national median of $57,100 for all families with chil-
dren, and nearly four times the $23,000 median for families led
by a single mother.”
It’s interesting to note an educational gap has been develop-
ing between husbands and wives, as well. A growing propor-
tion of married women are better educated than their husbands.
According to Pew Research, “the share of couples in which
the mother has attained a higher education than her spouse has
gone up from 7 percent in 1960 to 23 percent in 2011.” This
probably shouldn’t be a surprise since more women than men
have been receiving college degrees of all types - associates,
bachelors, masters, and doctorates - every year since 1982.
Perceptions about women’s roles in both the workplace and the
family appear to be changing, too. According to another Pew
report, almost three-fourths of American adults say having
more women in the workforce has been a change for the better.
About 60 percent say family life is more satisfying when both
spouses work and they share responsibility for housework and
child care.
Weekly Focus - Think About It
“If we become increasingly humble about how little we know,
we may be more eager to search.”
-Sir John Templeton, Global investing pioneer
Let us continue to pray, work, sacrifice and do whatever it takes
to protect the freedoms guaranteed in our constitution!
schools in Texas follow the same pattern. When someone
doesn’t do a satisfactory job they get canned. He made the
argument that a coach in high schools that goes very long
with a losing record or one that is poorer than expected is
shown the door. Athletes must rank high up on the impor-
tant accomplishments in high schools because this is the
normal reaction to a bad season or two.
He went further and stated that a teacher that had prob-
lems getting test scores up where the school administration
wanted was reassigned or their contract would not be re-
newed. His argument was that schools seem to fire, demote
or replace those coaches and teachers in education that per-
formed below the acceptable level.
But his question was why wasn’t there any superintendents
fired when school grades are not brought up to the state
level, when more students are dropping out of the school,
or the financials are in the red or a nightmare to understand
due to movement of funds. The logic he was finding was
that the schools had gotten into the practice of holding the
smaller employees accountable but not the administration,
financial officer or superintendent.
Now the point he was developing is that the real problems
in Texas schools may be the administration and day to day
management of the school districts affairs, not the students,
coaches, or teachers.
In examining the situation of many schools in Texas he
may be on to something.
In trying to answer his question you need to understand
that this man, is very astute in sorting out financials, and
running businesses after retiring from IBM.
My conclusion is that he has merit to his analysis, and that
the most reasonable explanation of why this is so is that the
superintendent’s recommendations and spending is usu-
ally accepted by a school board that allows the decisions to
made by such a person and they merely authorize it with a
“Yes” vote. Many times the board trustees are only given a
few minutes to decide on expenses. This encourages them
to take the word of the presenter and do little or no research.
Of course there could be a lot of reasons and many differ-
ent in other districts. But the problem as Harry illustrates
can not be cured until the school board takes control of
their actions and all superintendents are held accountable.
Now when I say something like this, all the elected school
trustees in Texas will jump to their feet and holler foul.
They will tell of the hard work and research, their free
time they dedicate to the schools, and their background that
makes them qualified to do a great job. But the sad fact is
that the past 10 years will furnish all the proof you need
to know a terrible job is being done by most Texas school
districts, some a lot longer than that.
As long as the Trustees don’t stand their ground and de-
mand answers, expect accountability and remove any
school employee that acts outside their given power, or
leads the trustee board down a false path things will not
improve.
The recent conclusion by a Texas group with a respected
reputation that stated “The biggest single problem in Texas
Education is the incompetency of the elected school board
trustees” says a lot about the problems in our schools. I
would suspect that this conclusion was partially arrived at
by the sheer freedom the trustees allow their superinten-
dent and financial officer. When these board members go
along to get along bad things happen. We must remember
that most superintendents have a background in education
not business management, and a financial officer is usually
a card carrying CPA, that can make the figures jive, but has
no experience at all in purchasing or spending or making
competent decisions. These are harsh words, but are the
ones that are needed to bring the problems of operations of
our Texas schools to the attention of the voters and tax pay-
ers of every school district in Texas, as well as the Texas
Education Agency in Austin.
There must be changes made in our operations if we are to
regain financial stability, college acceptable scores, lessen
the tax burden on our citizens and make the schools more
appealing in subject matter and student treatment, as well
as make the teachers a part of the operation.
I challenge the elected school board members to take the
time to ask the hard questions, to stop voting for everything
because someone said it was needed or would make the
students better. There are things that will help but research-
ing to make up your own mind will most likely lower the
items passed in every board meeting to the ones that really
appear to bring a benefit to the school. And there are good
elected school trustees that mean well, but accept someone
else’s opinion. This is the largest problem facing school
boards today. They are not doing their homework, or if they
are they are getting a biased work sheet to make their deci-
sion from. Happens every day in Texas education.
There is not a bullet proof answer to your concern. The
blind acceptance of the school administration, who are rep-
resented as skilled and knowing what their job is and how
to do it, is simply a lie in today’s school operations.
The sad conclusion is that most superintendents and finan-
cials officers are in over their head and will not admit it.
When things get tough they move on to the next job and
continue to do a poor job. Why are they not fire, as you
asked? The answer is connected to the fact that the silly con-
tracts given to most superintendents won’t allow the board
to fire them unless they pay them the rest of their contract
or a big severance check. These contracts have gotten out
of hand, and over priced. The situation might be helped if
their contract was directly tied to a performance clause that
allowed the school to release them with no future buyouts
if those performance levels were not achieved.
You say the superintendents wouldn’t accept the job with
those restrictions? Well then they must obviously know
they are not capable of handling the job. Others that are
qualified will take the job.
One of the forgotten errors of school board members is that
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Oaks, Judy & Oaks, Kelly. The Cleburne Eagle News (Cleburne, Tex.), Ed. 1 Thursday, July 11, 2013, newspaper, July 11, 2013; Cleburne, Texas. (https://texashistory.unt.edu/ark:/67531/metapth1499810/m1/4/?q=%22~1%22~1: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting Johnson County Historical Commission.